Homebuying Basics

Arm yourself with the information you need, as we walk you step-by-step through the homebuying journey.

MORTGAGE SOLUTIONS

To learn about each option available, scroll down or click on the specific loan below.

BENEFITS OF HOMEOWNERSHIP

Building Your Equity. A mortgage payment is made up of interest and principal. The interest portion is the cost of borrowing the money to buy your home. The principal portion will go towards paying down on what you owe on your home. Your equity increases with every payment you make. Equity is the difference in how much the home is worth versus how much you owe on the mortgage. Once you have fully paid off the mortgage, you will have full equity/ownership in your home.

Investing in an Appreciating Asset. A house is typically an appreciating asset, which means that overtime, your home has the potential of being worth more than when you first bought it.

Creating Tax Benefits. The interest you pay on your home, as well as your property taxes, can typically be tax-deductible when filing your income taxes. Be sure to consult your tax advisor.

Building Your Credit. You can build and enhance your credit by paying your monthly mortgage payments on time.

Ownership. Unlike renting, homeownership allows you to be in full control of your home. It will give you a sense of stability and permanence. You will have the flexibility of making home improvements when needed and will never have to deal with unexpected rent increases.

UNDERSTAND THE BASICS

Prequalification. Prequalification is a simple way of finding out a ballpark estimate of how much you are eligible to borrow. When getting prequalified, there are no costs or commitments on either side. Instead, it is just an inquiry to help you determine a price range for house hunting. By getting prequalified, you are able to narrow your housing options, focusing only on the ones you can afford. Obtaining prequalification is done before you look for a home. After you have found a home and you are ready to purchase, you will formally apply for a loan.

Choosing a Realtor. It is important to find a realtor you trust and enjoy being around. A good way to find a realtor is through recommendations from family, friends and colleagues. Don’t choose your realtor on a whim, but consider several realtors in order to compare their rates. Next, make sure your realtor understands your list of needs and wants. A good realtor will make sure all these factors are considered and find the best home to meet your needs.

Making an Offer. Once you have selected the home, it is time to make an offer. As the buyer, you and your realtor will put together a purchase offer to give to the seller. The purchase offer tells the seller the amount you are willing to pay for the house, the closing date you are requesting, an expiration date for when the offer becomes invalid, and other terms that need to be agreed upon by both parties. Typically, a seller does not accept the first offer and will negotiate the price and terms of the agreement. As the buyer, have a goal in mind of what you are willing to spend on the home, and work with your realtor to negotiate the price. To learn more, visit our tips on negotiating.

Application and Loan Documentation. Regardless of whether you are planning on purchasing a home or condominium, the documentation needed is the same. For a complete list of documents needed, reference the Borrower’s Checklist.

Loan Process Timeline. The lending process normally takes several weeks. During this time, the Mortgage Banker is making sure all obligations related to your home purchase is complete.

CONSIDERATIONS BEFORE BUYING

More Financial Responsibilities. When buying a home, you will be responsible for paying your monthly mortgage payment, property taxes and homeowners insurance. In addition, you will need to pay your utilities, maintenance and repair costs.

Depreciation Risk. Typically, a home increases in value overtime, but in some cases, your home potentially could lose value overtime, meaning it is worth less than when you first bought it. As a potential homebuyer, you should be aware of this risk.

Less Flexibility. When renting, you have the ability to move easily and without much hassle. Yet, when owning a home, the moving process is more complicated with the need of first selling your home.

PREPARE FOR HOMEBUYING

Create a financial plan and begin saving. When buying, you will need money for the down payment and closing costs for the home. The more money you can initially put down on the home, the less you will pay in interest over time.

Understand the importance of a credit score and credit history. Lenders will review your credit score and history to determine how you handle credit. Your credit score affects the loan program you may be eligible for and the terms of the mortgage, like your interest rate. Learn more.

Determine how much you can borrow. Before house hunting, it is a good idea to calculate how much you can borrow. This is called prequalification. Pre-qualifying will help you estimate the amount of home you can purchase and what loan products may best fit your needs.